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U.S. Supreme Court Shuts Down Patent Troll Venue Shopping

On May 22, 2017, the U.S. Supreme Court issued its unanimous decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, S.Ct. 2017, and drastically changed the politics of venue selection in patent cases. The decision requires patent owners to bring infringement lawsuits in the state where the alleged infringer is incorporated, pursuant to the venue provision of the U.S. Patent Act.

This infringement suit was filed in Delaware because TC Heartland allegedly shipped infringing products to that state. TC Heartland moved to transfer the venue of the lawsuit to Indiana, the state where it is incorporated and headquartered. The motion was denied under the 27-year-old precedent established by the Federal Circuit in VE Holding v. Johnson Gas Appliance, 917 F. 2d 1574, Court of Appeals, Federal Circuit, 1990, in which the Court held that venue could be established by the general venue provisions set forth in 28 USC 1391(c). The Federal Circuit denied TC Heartland’s petition for writ of mandamus.

The Supreme Court reversed this decision, holding that the only applicable patent venue statute is 28 USC 1400(b). That statute limits venue in a patent infringement action to the state where the defendant company is incorporated or where there has been an act of infringement and the defendant has a regular and established place of business.

The TC Heartland decision has enormous significance in the patent world, where approximately 35 percent of infringement lawsuits are brought in the Eastern District of Texas because it is perceived to be patent-owner friendly. Other states have drawn a disproportionate share of patent litigation as well; for example, Delaware and New Jersey have a concentration of generic pharmaceutical patent litigation.

This decision could substantially reduce the flurry of lawsuits filed by patent trolls in patent-owner-friendly jurisdictions such as the Eastern District of Texas. The decision is particularly beneficial for small companies, which often lack the resources to litigate expensive out-of-state infringement actions.

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